Coffee Market
Tuesday, October 8th, 2002Coffee demand is down. So are world coffee prices. For some farmers, the price that buyers are willing to pay for their product does not cover the cost of producing the crop.
This is not surprising: coffee demand varies rapidly, and coffee production varies slowly. Land needs to be cleared to be put into cultivation and maintained once cleared. Farmers who grow cash crops are in business, and sometimes a business has a bad year. Or two. Or four in a row.
(But I don’t see restaurant owners crying out for price subsidies and handouts. I don’t see benefit concerts organized for local hardware store owners.)
Oxfam’s proposed solution is to destroy some 5 million bags of coffee, thus raising the market price. They’re asking the major retailers (Kraft, Nestle, Sara Lee etc.) to do this. The major retailers, sensibly enough, claim that this will only address this year’s surplus and will actually encourage more overproduction.